Banking, Money and Taxes in China
Banking in China is generally very straightforward and various local and international options are available. The language barrier may present challenges, but many organisations have service options in English. It's also easy to employ the expertise of a translator or a Chinese friend if things become complicated.
Some expats, especially those only plan on staying in China for a short while, prefer offshore accounts even though these carry hefty transaction fees.
The official currency in China is the Renminbi (RMB). It’s often referred to as the Yuan or Kuài, an informal word for money. One renminbi is equal to 100 fen or 10 jiao. The ISO code for the renminbi is CNY.
- Notes: 1, 2, 5, 10, 20, 50, 100 RMB
- Coins: 1 and 5 jiao, and 1 RMB (which is equal to 10 jiao)
Banking in China
Opening a bank account in China is relatively hassle-free. Familiar international brands and a number of local institutions are available. Both options have pros and cons, and the best choice depends on individual circumstances.
Many expats prefer using an international bank such as HSBC or Citibank, especially if they have an existing account with one of these. But international banks require a sizeable minimum balance or maintenance deposit, and ATMs may be limited in certain locations, especially outside large cities. International credit cards are widely accepted.
Local banks such as Bank of China, the Construction Bank of China (CBC) and the Agricultural Bank of China have ample ATMs across the country and expats generally only need their passport and a small amount of currency to open a basic account, although some branches may require a copy of the applicant's visa or proof of residence.
As with many bureaucratic processes in China, the language barrier can present a problem. Information provided by banks is often written in Chinese, and asking for an English translation or enlisting the help of someone who speaks the language may be necessary.
Otherwise, many expats identify a branch where employees can speak English and in close proximity to their home or workplace, and use this outlet for complicated queries.
Certain banks are well known among expats for their user-friendly and reliable English Internet banking systems, chief among these are ICBC and CBC.
While Chinese banks provide new account holders with a debit card that works at most ATMs, paying at stores is usually done in cash. ATM withdrawal limits are also lower than in Europe or the US, so if a large amount of cash needs to be withdrawn it may have to be done over a few days.
Taxes in China
Expats who have lived in the country for between one and five years must pay tax in China based on their local income and on income brought into the country. After five years, residents must pay tax on their worldwide income, although deductions are often applicable if tax is also paid to their home country.
For expats who live in China as well as another country, the total number of days spent inside China is used to determine tax status.
Chinese taxes start at three percent for incomes less than 1,500 RMB, and progressively increase to 45 percent for incomes over 80,000 RMB. Tax laws often change and keeping up to date is important as the penalties can be harsh.
As in any country, tax laws for expatriates in China can be complex and may be better dealt with through a tax professional. Companies should help new employees register for the tax system and often deduct personal income tax automatically.